Mason Hawkins

Mason Hawkins

Last Update: 07-11-2016

Number of Stocks: 28
Number of New Stocks: 2

Total Value: $10,361 Mil
Q/Q Turnover: 4%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Mason Hawkins Watch

  • Longleaf Partners Comments on DreamWorks Animation

    A top contributor to the Fund, film studio DreamWorks Animation (NASDAQ:DWA) gained 16% for the year after a substantial 48% rise in the fourth quarter—an example of how quickly payoff patterns can move. The company had a box office success with the late March release of the movie Home, which continued to do well in home video and streaming. In December, DreamWorks announced a co-production deal with DHX Media, demonstrating that the company’s efforts to develop television content has progressed into recurring revenues. The New Media segment, which contains AwesomenessTV, had impressive revenue growth and margins. License renewals helped drive strong revenue and earnings growth in the consumer division. CEO Jeffrey Katzenberg’s push in the Chinese film distribution market via the 45% Oriental DreamWorks JV has potential for meaningful upside.


    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.

      


  • Longleaf Partners Small-Cap Fund Commentary 4th Quarter

    The Fund’s six energy-related holdings in 2015 combined to account for the Fund’s negative return and relative underperformance of the year and dampened the otherwise strong absolute and relative performance in the fourth quarter. Although our oil and gas price assumptions have been wrong, we believe that CONSOL Energy (NYSE:CNX) could rapidly rebound with major asset sales and, along with Triangle Petroleum, will benefit when commodity prices correct as supply and demand eventually rebalance. At both companies, our management partners are taking action, including cutting costs, increasing financial flexibility, and selling assets to ensure the companies can withstand the difficult commodity environment. These two companies trade at a substantial discount to our appraisal and, we believe, offer greater potential upside than the index. However, the short-term performance masked the positive progress across the majority of our businesses in the year.

      


  • Longleaf Partners Comments on Murphy Oil

    In the fourth quarter, we sold Murphy Oil (NYSE:MUR), an E&P company with a portfolio of global offshore and onshore assets, after the stock declined 51% and was among the Fund’s largest detractors for the year. Following several disappointing drilling results and a lack of management plans for near-term ways to go on offense, we redeployed this capital into the high-quality franchise of National Oilwell Varco (NYSE:NOV).


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners Comments on CONSOL Energy

    Also previously mentioned, CONSOL Energy (NYSE:CNX), the Appalachian coal and natural gas company, was down 76% in 2015 after falling 19% in the fourth quarter as the company missed operating cash flow (OCF) estimates amidst declining coal and gas prices. Management is adjusting to lower commodity prices and adopted significant cost controls under zero-based budgeting while still growing natural gas production. We filed a 13-D during the third quarter to discuss with third parties as well as management and the board a potential monetization or separation of the valuable Marcellus and Utica gas assets. This has been a constructive process since filing, and we appraise these assets at worth demonstrably more than CONSOL’s total equity capitalization. CONSOL’s exploration and production (E&P) business is unique, with low cost reserves given the company’s fee ownership of many acres. CONSOL announced in the fourth quarter that its thermal coal business, which enjoys a low cost position, had contracted for 93% of production for 2016 at a confirmed price of $50-55 per ton, providing near-term downside coal business risk mitigation. Multiple directors recently purchased shares.


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners Comments on Chesapeake Energy

    As noted, Chesapeake Energy (NYSE:CHK), the second largest producer of natural gas in the U.S., declined 39% in the quarter and 77% for the year, making it the largest detractor of performance in both periods. Options accounted for 40% of our position and slightly half of our return. Fears related to further declines in energy prices drove the stock lower, despite CEO Doug Lawler’s progress in areas he could control. After reaffirming the company’s untapped $4 billion revolving credit facility and renegotiating a deal with Williams (pipeline operator), in the fourth quarter Chesapeake turned to restructuring its debt. Chesapeake offered to exchange various unsecured debt securities at a discount to par for secured debt with a later maturity. Pushing out due dates coupled with reducing overall debt outstanding should help the company weather a sustained low energy price environment.


    Over the year we adjusted our appraisal of Chesapeake to account for the tumble in oil and natural gas prices. Even with the depressed energy prices of today and little growth in that price as indicated by the futures strip pricing, the company’s non-producing assets have value that is not reflected at all in the stock price. Asset sale transactions in basins where Chesapeake operates helped validate our appraisal. We expect the company will continue to reduce costs while also seeking asset sales at fair prices. We are mindful of the risks associated with commodity companies. Once the debt restructuring was announced, we added to higher parts of the company’s capital structure that became particularly discounted.

      


  • Longleaf Partners Comments on McDonald’s

    During the quarter, we began exiting our successful investment in global quick service restaurant operator McDonald’s (NYSE:MCD) and completed the sale in the first week of 2016. The stock was a strong contributor for the year, up 31%, and the last three months, up 21%. When we initially purchased the company in late 2014, we believed management could overcome short-term obstacles and turn around same-store sales in certain struggling markets. Additionally, we saw optionality in the value of the company’s real estate assets. Over the course of our investment, McDonald’s hired a new CEO, Steve Easterbrook, a move welcomed by investors. His plan to revive the business both operationally and structurally helped drive the stock price. Although management and the board decided not to monetize the real estate assets, the stock price reached our appraised value in an unexpectedly short period. Over the year plus that we owned the stock, it gained 34% and was among the strongest contributors to performance. We appreciate the board’s and management’s solid execution. We hope that Mr. Market gives us an opportunity to partner with them in the future.


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners Comments on CK Hutchison

    CK Hutchison (HKSE:00001), a conglomerate comprised of the non-real estate businesses from the June merger between Cheung Kong and its subsidiary, Hutchison Whampoa, returned 23% during 2015 when combined with Cheung Kong Property. The corporate transaction helped remove holding company discounts and clarify business line exposures by splitting the conglomerate between the property business (Cheung Kong Property Holdings) and the non-property business (CK Hutchison Holdings). The transaction is likely to be viewed as a seminal event leading to improved governance and structure for other complex conglomerates in Asia. Chairman Li Ka-shing and his son, Victor Li, have demonstrated a track record of building businesses and buying and selling assets at compelling values.


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners Comments on Wynn Resorts

    Another notable contributor in the quarter, Wynn Resorts (NASDAQ:WYNN), the luxury gaming and hotel company with prime real estate in Las Vegas, Boston, and Macau, was up 31% but down 47% since we first added the position earlier in the year. The stock became deeply discounted as China’s anti-corruption campaign pressured revenues in Macau where Wynn is among six current operators and is scheduled to open the Wynn Palace in Cotai in June 2016. During the recent quarter, Macau sentiment began to turn as revenues stabilized. CEO Steve Wynn demonstrated his commitment and confidence in the business, purchasing over one million shares in early December and bringing his stake in the company to nearly 11%. Year-over-year comparable gross gaming revenues should improve in 2016, and Wynn cash flow will be bolstered with the Cotai property coming online. Longer term, we believe the company can generate impressive returns. Macau revenues from mass and premium mass visitors should grow with added non-gaming attractions, needed hotel room supply, and infrastructure improvements that bolster arrivals. Additionally, the Wynn Everett is in early site preparation with a strategic location just outside of Boston, but its value is not reflected in the stock price because it is several years from opening. Opportunities to partner with proven value creators like Steve Wynn at such a large discount to our appraised value exist over time, but rarely do we see one where the near-term market extrapolations are so distinct from the long-term earnings power of the company.


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners Comments on Alphabet

    Alphabet (NASDAQ:GOOGL) (formerly named Google) gained 51% for the year on the back of a 25% rise in the fourth quarter. The company reported strong revenue growth year-over-year across the U.S., U.K., and the rest of the world. The bear case that the move to mobile search would be detrimental to revenues and market share seemed to fade. Mobile queries now outnumber desktop queries in important countries, and mobile revenue per click is improving. Alphabet segment YouTube’s growth remained strong, and the company announced a new pay tier named Red. Disclosure should improve with new reporting of segments in January. During the fourth quarter, a new share buyback program was authorized, further affirming the company’s attention to capital allocation.


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners Comments on Level 3 Communications

    After being a top contributor in the fourth quarter and adding 25%, Level 3 Communications (NYSE:LVLT) gained 10% for the full year. Over the course of the year, operating metrics continued to improve. During the fourth quarter, company segment Core Network Services’ (CNS) organic revenue grew 6% year-over-year. Within CNS, Enterprise revenue grew 8%. This revenue growth, combined with the synergies created by the merger with tw telecom, resulted in margin expansion. The high contribution margins, which are currently over 60%, have been one of the focal points of our Level 3 investment case and are one of the primary drivers of high growth in both EBITDA (earnings before interest, taxes, depreciation and amortization) and FCF (free cash flow) growth. In 2016, we believe the company will generate approximately $5.00/ share of FCF before discretionary growth capital expenditures, which translates to approximately 10x FCF on current price. The company’s success-based growth capex is tied to new, high margin, revenue-producing contracts. Given management’s excellent execution, we expect leverage ratios to continue to improve from their current 4x debt/EBITDA levels into the 3x’s.


    From Longleaf Partners Fund 4th quarter commentary.

      


  • Longleaf Partners 4th Quarter Fund Commentary

    Longleaf Partners Fund’s 5.47% advance in the quarter brought the 2015 return to -18.80%. These results fell below the S&P 500’s gains of 7.04% and 1.38% for the same periods. The Fund’s energy-related holdings were the leading detractors for the quarter and the year due to the sharp decline in energy prices. Since its inception, the Fund has outperformed the index.

      


  • Larry Robbins Exits McDonald's, Paypal, Fossil

    Larry Robbins (TradesPortfolio) of Glenview Capital Management sold out several stakes in the third quarter.


    Glenview Capital Management, founded in 2000 by Larry Robbins (Trades, Portfolio), is a privately held investment management firm. Following are the trades with a high impact on the portfolio.

      


  • Mason Hawkins' Firm Bets on Cost-Cutting Efforts at Consol Energy

    Following a small sale last month, the Mason Hawkins (Trades, Portfolio)-led Southeastern Asset Management upped its stake in Consol Energy (NYSE:CNX) by about 15% Monday, picking up more shares as energy stocks continue to lower.

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  • Microsoft, Intel and National Oilwell Varco Have High Dividend Yields in Bill Nygren's Portfolio

    Bill Nygren (Trades, Portfolio) is portfolio manager of The Oakmark Fund, The Oakmark Select Fund and the Oakmark Global Select Fund. Nygren and his partners invest in companies they believe trade at a substantial discount to what they consider to be the true business value.


    National Oilwell Varco Inc. (NOV)

      


  • Mason Hawkins Increases FedEx Stake by 25%

    Mason Hawkins is primarily a value investor similar to Benjamin Graham and Philip Fisher. These legendary gurus look for businesses with good management, good people, and companies that sell for deep discounts significantly less than their intrinsic value.


    Hawkins founded Southeastern Asset Management in 1975 and is the chairman and CEO for the company. Hawkins and his team of long-term value investors look to build portfolios primarily focusing on 18 to 22 stocks at any given time, looking at a wide range of industries. Hawkins believes that concentrating allows for adequate diversification, while providing some of the best opportunities to maximize returns, and minimize loss of principal.

      


  • Loews, Scripps Networks Among Mason Hawkins' Attractive Holdings

    Mason Hawkins (Trades, Portfolio) has been the chairman and CEO of Southeastern Asset Management since 1975. The firm is a value investment firm and looks for three things in a business: good business, good people and a good price. He seeks to invest in businesses that are easily understandable, have strong balance sheets, are run by capable and shareholder friendly management, and trading at less than intrinsic value. The company will ascertain the intrinsic value of the business by looking at the asset value of the business or calculating the present value of future free cash flow. He is a very concentrated investor, normally holding less than 25 stocks in a portfolio at any given time.


    Here are three companies from the portfolio that we find interesting at current levels:

      


  • Longleaf Partners' Semiannual Investor Meeting Slide Presentation



  • Longleaf Partners' Semiannual Investor Webcast Transcript



  • Mason Hawkins Reduces Portfolio in 3 Holdings

    Legendary investment guru Mason Hawkins sold 51,700,581 shares from his portfolio in Triangle Petroleum Corp. (TPLM), Level 3 Communications Inc. (NYSE:LVLT) and Loews Corp. (NYSE:L).


    Hawkins is primarily a value investor similar to Benjamin Graham and Philip A. Fisher. These legendary gurus looked for businesses with good management, good people and companies that sold for discounts significantly lower than their intrinsic values.

      


  • Mason Hawkins Buys Stakes in du Pont, Tribune Media in 3rd Quarter

    Value investor Mason Hawkins (Trades, Portfolio), chairman and CEO of Southeastern Asset Management, says he looks for “good business, good people and a good price” when looking for investment opportunities. Using those criteria, he found several options in the third quarter.


    Hawkins’ most noteworthy third-quarter transaction was his purchase of a 7,810,399-share stake in E.I. du Pont de Nemours & Company (NYSE:DD), a Wilmington, Del.-based chemical company, for an average price of $53.37 per share. The deal had a 3.18% impact on Hawkins’ portfolio.

      


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